Ukraine Inflation

Ukraine: Inflation continues to climb at start of year

February 9, 2015

Consumer prices increased 3.1% In January over the previous month, which followed the 3.0% rise registered in December and marked the highest reading since May 2014. January’s figure was driven by an across-the-board increase in prices, with prices for food and beverages as well as prices for alcoholic beverages and tobacco recording the largest increases.

Annual inflation continued surging upward, reaching 28.5% in January. The result was up from the 24.9% tallied in December and marked an over-six-year high. Inflation has skyrocketed since the onset of the military conflict in Eastern Ukraine, pushed up by sharp increases in the price for gas along with a drastic depreciation of the hryvnia. In addition, annual average variation increased from 12.1% at the end of 2014 to 14.5% in January.

FocusEconomics Consensus Forecast panelists expect inflation to end 2015 at 15.0%, which is up 2.4 percentage points from last month’s forecast. For 2016, the panel sees inflation easing to 9.3%.

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Ukraine Economic News

According to data released by the Statistical Institute, industrial activity fell 0.5% in December over the same month of 2016, reverting to contractionary territory after expansions of 0.3% and 0.4% in November and October, respectively.

At its meeting on 25 January, the National Bank of Ukraine (NBU) in a surprise move announced its decision to hike the key policy rate from 14.50% to 16.00%, marking the third consecutive rate hike since October.